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Ocean Building and Ocean Towers are located at the Collyer Quay junction of
Raffles Place financial district
ESSENTIALS:
Street Address: 20
Raffles Place
Postal Code: 048620
Built:
1999
Height: 79
m 259 ft
NEWS
STORIES:
10 Feb 2002 - Demonstrating its
serious intention to divest its investment property portfolio, Keppel Land
recently appointed property consultant CB Richard Ellis (CBRE) to market
Ocean Building and Ocean Towers along Collyer Quay, say sources.
The two 999-year leasehold office blocks,
with total gross lettable area (GLA) of 670,000 sq ft, were valued at more
than $800 million at the end of last year.
Business Times reported
last week that Jones Lang LaSalle has been appointed to sell another
building in which KepLand has a stake, the Bugis Junction
retail-office-hotel complex estimated to be worth about $900 million, after
all four owners of the complex finally agreed to a sale.
As in the case of Bugis Junction, KepLand
is said to be open to all modes of divestment for Ocean Building and Ocean
Towers, including asset securitisation.
'It will not be a fire sale, but it shows
Keppel management is pretty serious about their intention declared last year
to dispose of all their major existing investment properties in Singapore to
pare debt,' said an analyst.
Late last year, KepLand and Rodamco sold
their 70:30 stakes in Capital Square in a deal brokered by CBRE.
That sale, through an asset
securitisation which drew German insurance giant Ergo and its associates as
investors, valued Capital Square at $490 million. This works out to $1,300
psf of lettable area or $1,200 psf of strata area, resulting in net yields
of about 6 and 6.25 per cent respectively.
OCEAN BUILDING
As for Ocean Building and Ocean Towers,
property analysts estimate that the end-2002 valuations for these assets
announced by KepLand recently probably work out to net yields of about 3 per
cent taking into account current vacancy rates for older buildings in the
location.
Given that potential investors are likely
to demand a higher yield of say at least 5 per cent, this would translate to
a lower price for the buildings.
The good news for KepLand shareholders is
that even if the group sells these two buildings at prices below their
end-2002 valuations, KepLand may still be able to book profits from the
transactions, given the low historical costs.
This is unlike Capital Square, which was
developed on land bought in 1995, during the property bull market and whose
recent sale was at a loss in KepLand's accounts.
KepLand managing director Kevin Wong
indicated recently when announcing the group's full-year 2002 results that
the bulk of its investment buildings, including Ocean Towers and Ocean
Building, 'have fairly low historical cost, which means if we sell, we would
make profits'.
Ocean Building was completed in 1974 and
Ocean Towers in 1992. Based on earlier media reports, the two were developed
for about $70 million and $143 million respectively. Their end-2002
valuations were $498.6 million and $314.3 million respectively. The latest
valuations done by Colliers International were released recently by KepLand
when it announced its full-year 2002 results.
The latest valuation for Ocean Building
done by Colliers works out to $1,180 per square foot of the 29-storey
building's GLA of 422,537 sq ft. The property is nearly 30 years old.
Ocean Towers, completed 11 years ago, was
valued by Colliers at the end of last year at $314.3 million or $1,270 psf
of the building's 247,462 sq ft GLA.
KepLand has majority interest of 76 per
cent in both properties. The rest is held by Hongkong and Shanghai Banking
Corp and Avan Investments, controlled by Malacca's wealthy Ong family.
- By Kalpana Rashiwala
Singapore
Business Times
10 Feb 2003
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